Brown Company Produces Flash Drives for Computers, Which It Sells

question 53

Multiple Choice

Brown Company produces flash drives for computers, which it sells for $20 each. Each flash drive costs $6 of variable costs to make. During March, 1,000 drives were sold. Fixed costs for March were $4.20 per unit for a total of $4,200 for the month. If variable costs decrease by 10%, what happens to the break-even level of units per month for Brown Company?

• A) It is 10% higher than the original break-even point.
• B) It decreases about 12 units.
• C) It decreases about 30 units.
• D) It depends on the number of units the company expects to produce and sell.

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Definitions:

Divisor

The number used to divide into another number.

Bracket

A support device used in construction and orthodontics, often made of metal, that holds objects together or attaches them to a surface.

Metric Unit

A standard unit of measurement based on the metric system, such as meter for length, kilogram for mass, and second for time.

Length

The measurement of something from end to end or the extent of something in space.